Callum Hudson-Odoi has signed a new five-year contract with the club that will see him earn up to £180,000-a-week.
The deal will initially be worth £150,000, but could end up totalling £180,000 with performance-related add-ons and will run until 2024.
It ends a saga that at one stage saw many believe Hudson-Odoi would join Bayern Munich.
The 18-year-old handed in a transfer request towards the end of the January transfer window, after Bayern made a series of bids, with the final offer totalling £35million.
“It’s an amazing feeling. It’s been a long wait but it’s done now and I’m really happy about that. I’ve been a Chelsea player since I was eight and this is the right club for me to be at.
“I want to lift as many trophies as possible, win as many games as possible and contribute to as many goals as I can as well.
“As a team, we just want to work hard to achieve the best results we can. I’m delighted everything has been agreed and now I’m just looking forward to properly getting back,” Hudson-Odoi told the club’s website.